Posts Tagged ‘HRIS’

Selecting an Assessment Tool – 5 Business Principles Vital to Your Success

December 12, 2015

Executive Summary

The goal within most
organizations is to hire a happy, productive workforce that stays on the
job longer and produces more. That simple mission is often very hard to
execute without an HR tool that is proven to predict a candidate’s
on-the-job performance and tenure. Volumes of research show that an
assessment technology-when positioned and deployed correctly-will reduce
turnover and improve productivity while creating a reservoir of
objective performance data designed to identify prospective employees
who are good fits in specific job roles.

To fulfill the mission of
hiring a productive workforce that stays on the job longer and produces
more, assessment technology has become a mission critical component for
organizations. With the right assessment technology, your company
should have the means to identify, develop, and retain a highly
productive workforce, which is one of the vital ingredients to business
success.

I want to share with you lessons I’ve learned over the
last decade on how to most effectively select, deploy, and study the
effectiveness of an assessment technology solution. Equipped with these
five principles, you possess the fundamental components that must be
top-of-mind when purchasing an assessment technology solution.

The Principles

Principle #1: An assessment technology should be…

Proven to predict employee performance.

Assessment
technologies are designed to assist organizations in identifying
candidates who will be successful on the job. To determine which
assessment can best meet your organization’s needs, you must be
convinced of the system’s ability to predict performance. From an
objective, scientific perspective, performance predictability of an
assessment solution is most often documented through two concepts:
reliability and validity.

Reliability-Only Part of the Equation

I
met a good friend of mine at a golf course in West Texas many years
ago. Our plan was to enjoy a round or two and catch up on old times.
However, due to a high volume of golfers waiting in line, the course
officials paired us up with two “local boys” (that’s a Texanism for two
grown men you don’t know).

I was the last to tee off after
watching my friend and the two local boys really set the pace by
crushing their drives. Embarrassingly, I “topped” the ball, meaning I
barely caught enough of the ball to send it gently skipping down the
middle of the fairway about fifty yards from the tee box.

As golf
etiquette would have it, the player furthest from the hole must hit the
next stroke. As I took a couple of practice swings, I noticed the two
local boys waiting in front and just to the right of my position on the
fairway.

In a neighborly fashion, I called out, “Hey, you boys
might want to move. I have a nasty slice.” (My ball always curls off to
the right.) One of the two nonchalantly called back, “Aw, don’t worry,
you won’t hit us!” Not wanting to disrupt the flow of the game, I warily
continued to line up my shot. I tightened my grip on the club, took one
more practice swing, and then let it rip.

It really was a
beautiful shot-featuring my standard beautiful slice in all its glory.
The ball curved so fast I did not have time to yell “fore.” Before I
knew it, the ball whistled straight at the local boys and struck one
with a loud thud! (I suppose he was fortunate-the ball struck that
padded area between the hamstrings and the lower back.) The golfer with
the smarting backside shrieked so loudly that everyone on the course
felt his pain.

The ever-present slice in my golf swing provides
the perfect illustration of the concept of reliability in an assessment
technology.

In golf, I reliably slice the ball to the right side
of the course every time; you can count on it, and, unfortunately, the
local boys did not heed the warning. To relate this to assessment terms,
anytime you assess someone, you want to receive a reliable result. The
reliability of an assessment focuses on the consistency of the
responses, but not the accuracy. In practical terms, an assessment that
asks several similar questions-using slightly different words-would
yield similar answers. Put another way, if a person took an assessment,
then took it again later, the results should be very similar. By
contrast, if you receive a wide variety of responses, you would likely
determine that the measure is not reliable.

The statistical
reliability of an assessment is measured in several different ways. It
would take a lengthy white paper to cover this topic to my satisfaction,
but, in simple terms, a rule of thumb for a behavioral assessment
instrument is to achieve reliability of.7 to.8. This range will vary due
to the type of assessment that was used. I would encourage you to not
only ask about the reliability of any assessment technology, but also
the background data that defines how that number was generated.

It
is important to remember that reliability is only part of the equation.
Without validity, you will not have a full picture of the assessment’s
effectiveness. For example, to better understand the actual success of
my golf game (or lack thereof), we need to analyze my validity to
determine how accurately I can hit the ball in the hole. (At least I am
reliable…one out of two isn’t bad.)

Validity-Does the Assessment Work?

Validity
answers a very different question. Does it work? In the game of golf,
the number of strokes to complete a round of golf provides a validity
estimate of a player’s golfing abilities. It is important to understand
that one round of golf at one golf course does not provide an accurate
representation of one’s golfing ability. Golfers attain different scores
depending on the course played, weather, type of course, difficulty of
the course, the number of holes played, the number of strokes required
to make par, etc. It is not one round, but the body of evidence
collected over time that provides the validity of a player’s golf game.

This
concept translates nicely to assessment validity. When evaluating the
validity of an assessment technology, you should focus your evaluation
efforts on the volume of studies, types of roles, and the sample sizes
of the various studies. Generally, assessments should deliver a validity
coefficient in the neighborhood of.2 to.4. Like reliability, but even
more so, the range of the validity coefficient may vary due to the
context of the study, sample sizes, length of study, etc. Dig into the
reported validity coefficient as well as the supporting documentation
that details the study process.

Collectively, discussions around
reliability and validity should provide you with the confidence you need
to narrow the choices of possible assessment technologies for your
organization.

Principle #2: An assessment technology should be…

The catalyst to continuous workforce improvement.

To
stay competitive, every company should desire to see continuous
improvement in the workforce. The advantages that an organization gains
through the pursuit of continuous improvement are numerous: more
productive workers, better process efficiencies, lower overall expenses,
and higher revenues, to name a few. The key to that kind of
long-lasting improvement lies in bettering the performance of every
member of the organization. After all, individuals make up teams, teams
make up departments, departments comprise company divisions, and
divisions form corporations. Individual performers are the building
blocks of the entire structure.

Often the key role that individual performers play in creating a culture of continuous improvement is overlooked.

Traditionally,
companies are very good at monitoring and tracking performance of the
masses at the company, regional, and group levels. However, those same
organizations often miss the mark when it comes to tracking and
monitoring performance at the individual level. Without solid tracking
of individual job performance, companies are unable to evaluate
performance on the front lines where it actually occurs: at the
individual level.

As part of your evaluation of assessment
technologies, look for processes that rely heavily, if not solely, on
objective performance metrics to document the effectiveness of
individuals in the workforce. Individual performance numbers will not
only define “success” in your company and culture, but also serve to
link behaviors to performance when a behavioral assessment tool is
introduced into the hiring procedure.

This is how your assessment
technology can become the catalyst for continuous workforce improvement.
If positioned properly, the assessment software will be a crucial
collection point of individual behaviors-and related performance
metrics-that dictate what great performers look like in specific jobs.

To
derive the best results from an assessment technology, it is important
to understand performance in terms of data at the individual level.
Understanding individual performance will provide you with a clear
performance picture surrounding the objectives and desired outcomes for a
position. The clearer the performance picture, the more equipped you
are to accurately capture the behaviors and skills needed for success.

By
installing an assessment technology, your organization’s maintenance
will include reevaluating the clarity of performance data on a continual
basis in order to improve the behavioral/skill capture. In this
process, it is commonplace for companies to focus on higher quality
individual performance metrics to better leverage their assessment
technology. This effect will automatically raise the bar in terms of
selection, training, development, and employee productivity across any
position where an assessment technology is deployed.

In summary,
focusing on detailed, objective performance data collection methods will
inevitably lead to a better capture of behaviors and skills. A better
data capture through an assessment technology leads to the accumulation
of workers who are more aligned with desired business performance goals.
Eventually, one component improves the other, fueling an ongoing cycle
of continuous improvement.]

Principle #3: An assessment technology should be…

Focused on fit; more is not always best.

Have
you heard the saying, “More is better”? In the game of golf, you have a
variety of golf clubs designed for different situations. Some clubs are
for driving the ball great distances down the fairway, while other
clubs are used for shorter shots such as chipping or putting. Imagine
how your golf game would suffer if you believed that the bigger club was
always better. On a par three hole, you may overshoot the green with
one swing. Even worse, once you make it to the green, you will struggle
putting the ball in the hole using your driver. At that point, the
bigger club actually hurts your ability to maneuver the ball where you
want it to go, which is in the hole. By that logic, more is not always
better.

The same concept applies when it comes to using an
assessment. Typically, assessments measure a collection of
characteristics (referred to as factors, dimensions, etc.). Many people
assume-incorrectly- that it is always better to be on the higher side of
a characteristic (the More is Better Syndrome).

Let’s consider
the implications of this thought process. Is being smarter always
better? What about filling a mundane job vacancy? How long would a
brilliant person stay in a non-thinking, repetitive job? Is being highly
sociable a great characteristic for every job? Consider an isolated
role where interaction with others is detrimental to good performance.
Would a person who thrives on socializing enjoy, or be driven to
success, in this type of role?

Of course, I’m exaggerating these
scenarios to drive home the point: it is important to avoid the mistake
of assuming more is always better. The key to fully utilizing the power
of the assessment is to find just the right amount of many
characteristics to predict future success in a specific role.

By
fine-tuning the subtle shades of each assessment characteristic to best
describe your strongest performers, you will be better equipped to
maximize the predictive power of your assessment tool. Again, great
caution should be taken if your objective is to only use assessment
characteristics in the context of “more is better.” That method of
evaluation often leads to selection tactics based on incorrect
assumptions. Additionally, you will effectively dismiss a large amount
of hidden insight that will increase your predictive power to identify
your future top performers who will stay in position longer.

Keep
in mind that most assessment technologies are built according to the
assumption that more is better. Your evaluation of assessment
technologies should only include systems that measure a large group of
behavioral characteristics; moreover, the system must offer flexibility
in specifying the optimal amount of each characteristic an ideal
candidate would possess to succeed in the target job.

Principle #4: An assessment technology should be…

More than just a score.

When
selecting an assessment technology, it is important that the usefulness
of the assessment goes far beyond a simple score or rating of the
candidate. Overall scores are helpful when sorting and sifting
candidates and narrowing the field, but the real value comes when you
dig deeper and fully leverage all the rich information gathered from the
assessment. Specifically, you should be able to apply the assessment
information to areas such as enhancing the interview, on-boarding,
determining future career paths, and developing employees over the long
term.

Enhanced Interviews

Beyond providing a
score, information gained from the assessment should improve your
interview process. A quality assessment can effectively produce targeted
interview questions designed to facilitate discussion around the
specifics of a position. These targeted interview questions also provide
a means to ensure consistency in your interviewing process regardless
of the size or geography of your organization. Additionally, by using
the targeted interview questions, you will maximize your time with the
candidate. At a minimum, you will have a better understanding of the
strengths and opportunities revealed by the assessment in relation to a
specific position.

On-Boarding

On-boarding
is the process of getting a new hire officially authorized for his or
her first day on the job. This hiring phase includes the completion of
various governmental and proprietary forms, plus any other paperwork
required by the hiring company. To expedite this procedure, an
assessment technology will typically be integrated with the company’s
Human Resource Information System (HRIS) to pass on all relevant data
previously collected on the candidate. In essence, the assessment
platform should “fill in the blanks” required on electronic forms in the
HRIS database through a transfer of information from the candidate’s
original application. Without this integration (more on integrations in
the next section), on-boarding remains a manual process and any
potential efficiencies that could be driven from the assessment
technology are negated. Direct your evaluation of assessment
technologies to only those systems with proven integration success with
common HRIS technologies.

Career Pathing

Future career
paths are another area where an assessment technology should allow you
to go beyond a score. In companies with an eye to the future, the
selection strategy is to hire not only for the immediate need, but also
determine each employee’s viability for future positions. For example,
if you are tasked with hiring an assistant manager, you may also be
interested in a candidate’s potential to be a manager at some point down
the road. Your assessment technology should provide you with the
insight to understand and evaluate the potential for candidates to move
into other positions, and not just the job for which they applied.

Employee Coaching and Development

Companies
are often asked to do more work with fewer people on the payroll.
Therefore, coaching and employee development programs have become an
area of emphasis in most organizations. Consider future coaching tools
as an integral part of the assessment technology purchase. The
assessment process captures a wealth of data, which should be used
throughout the life cycle of an employee. By scientifically examining
the relationships between performance data and assessment characteristic
scores, the assessment technology provides specific, detailed
developmental targets to support continued growth of the assessed
individual.

One of the biggest hindrances to creating a quality
coaching and development program is finding specific content
statistically related to performance on the job. Assessment technology
provides the perfect vehicle to supply accurate, job-related content for
training in the current position, as well as in future positions.

Principle #5: An assessment technology should be…

A tool that makes your organization better.

Although
this principle serves as number five, it fits the old adage, “Last but
not least.” Central to any new purchase or program decision is the need
to determine how your organization will ultimately define value. A great
approach to this question is to ask, “How will this assessment
technology make us better?” You will find that value comes in many
forms; each organization has a unique focus that is proven to breed
success. Three universal ways in which an assessment technology can
better an organization are:

  • Better processes.
  • Better retention.
  • Better performance.

Better Process

The primary function of an
assessment technology is to address the fundamental challenge of
identifying candidates who produce more and stay longer on the job. In
fulfilling that primary function, your assessment technology should not
hinder your overall HR process, but in fact should streamline the hiring
workflow. This is most often accomplished through integrations with
existing software systems designed to manage the flow of information as
candidates move from their initial applications to their first day on
the job.

The advent of applicant tracking software (ATS) allowed
companies to manage the data generated during the hiring process. ATS
tools-not to be confused with assessment technology-were designed only
to collect, organize, and move candidates through the HR process. In
other words, they simply manage bits of information. Some applicant
tracking tools provide a few features such as pre-screens or light
assessment functionality, but the central focus is on organizing
information. These features are handy, but secondary, to the primary
objective of hiring the right fit for the job.

To enjoy the
functionality of assessment technology and an ATS, one business option
is to select an assessment technology that can co-exist side by side
with an ATS. However, this arrangement isn’t a requirement. Quality
assessment technology now provides features to categorize and sort
people, collect resumes, store applications, provide detailed reports,
and do many other practical tasks to manage your peopleflow-the path
every candidate takes from the “Apply Now” portal to the final hire/no
hire decision. The focus must always be on selecting the right candidate
for the job, but be aware that an assessment technology may build in
enough information management features to ensure that your hiring
process is smooth, user friendly, and meets your peopleflow needs.

Assessment + ATS = Integration

If
your organization has determined to use, or is currently using, an
applicant tracking software, then you want to make sure that the
assessment technology has the ability to integrate with that specific
ATS. Integration is defined as the process of connecting two or more
technology solutions together to create a seamless flow of information
from one system to another. The seamless flow should be present for both
the applicant and the end-user. The objective of an integration is to
simplify and streamline the data collection and delivery process.

Integrations
are common in the marketplace today. Many systems such as tax credit,
background checks, performance management, applicant tracking, and
payroll or human resource information systems (HRIS) are connected
through a seamless integration. You should expect an assessment
technology to provide you with a history of integrations and examples of
current clients already using the assessment technology integrated with
another ATS or HRIS.

Better Retention

A
business objective that is directly addressed by an effective assessment
technology solution is improving employee retention. Excessive employee
turnover effects all organizations in the form of both direct and
indirect costs. Direct costs include the placement of job postings, plus
the labor hours devoted to screening and interviewing candidates. There
are many indirect costs to consider as well. A few examples are down
time in the vacant position, lost opportunities, overtime expenses for
others to cover job vacancies, not to mention the potential negative
effect on company morale.

Regardless of your current retention
issues, the stakes are high and worthy of careful consideration. Cash
America, an international financial services company that studied its
hire-termination trends over a two-year period, conservatively
calculated the direct and indirect costs for replacing a store manager
at $10,000 each, and around $2,500 for each customer service
representative. Whether your numbers are higher or lower, it’s readily
apparent that for a company with thousands of employees, significant
reductions in employee turnover equates to millions of dollars saved
over time.

A common thread among much of the existing employment
research is the fact that candidates who are good behavioral fits to
their particular jobs tend to stay longer and turnover less frequently.
It is important to recognize that employee retention is a strong
indicator of an improvement effect from an assessment technology. Most
companies keep detailed records of terminations for payroll purposes,
which makes good business sense. No company would willingly continue to
pay an individual who is no longer employed. These records may provide
important data for a quality hire-termination study. For example, as
part of the aforementioned Cash America study consisting of data on
3,248 employees, the hire-termination data documented that the company
experienced a 43% turnover reduction in managerial positions after
implementing an assessment technology.

Keep in mind that obtaining study-worthy results for all positions in the organization simply may not be possible.

Expectations
for turnover studies should be appropriate to the scope of the
position. Roles with small populations, lack of accurate hire and
termination data, or an insufficient amount of time for data collection
can affect your ability to conduct a quality study.

Better Performance

I
have never met an executive who did not measure success in terms of
performance. Companies may evaluate performance in many different ways,
but one business rule is undeniable-improved performance comes from
improving your incumbents and selecting better people. Because so many
companies desire to improve their workforce, assessments are a great way
to drive improvement. An assessment technology modeled after actual
performance data provides a strong tool to select those who have the
greatest potential to perform well in the role.

When evaluating an
assessment technology, a very common question is often posed by company
executives, included in requests for proposals (RFPs), and/or submitted
by committees: “What is your validity coefficient?” By latching on to
this statistical term, the organization is really asking, “Does it
work?” Or, “Can you prove it has made other companies better in target
positions?” Let’s take a moment to dissect the meaning of this question.

As
we touched on in Principle #1, it is important to interpret any answer
to the validity question in the context of the particular situation.
Remember my golf game. If you ask me what I shoot, like any
self-respecting person I am going to tell you my best score. You might
think I am a decent golfer based on that one score. What I conveniently
neglected to tell you was the situation surrounding that score. I left
out the part about all the holes being par threes with no water, sand
traps, or trees to get in the way. On an average competitive golf
course, my performance would be much worse.

Interpreting validity
is more than just asking, “What is your validity coefficient?” You
should dig into the specifics of the situation. Pay attention to
specific items such as sample sizes, types of data being studied, types
of positions, or any other particular items of interest. Some studies
may not, at face value, seem impressive until you understand the
situation and the results based on the situation.

For example, by
deploying an assessment technology, a large call center enterprise hoped
to identify job candidates who could reduce the average time spent on
incoming phone calls. After studying the performance of 704 employees
over their first 12 months on the job, employees hired using the
assessment process averaged call times that were 1.14% shorter than
calls taken by their non-assessed coworkers. That translates to a
savings of approximately four seconds per call, or about the time it
took you to read this sentence.

At first glance, are you impressed
with a 1.14% improvement? Before you answer, consider this: across the
entire corporation consisting of multiple call centers, each second
shaved from the average call time is valued at $175,000 over the course
of a year. That four-second improvement saves over $700,000 per year
company-wide, and the assessment technology has paid for itself many
times over.

While there are plenty of success stories, be aware
that the reverse can occur. A study may appear very impressive at first
glance, but when the situation is exposed to the light, the results may
be found lacking due to tiny sample sizes or some other extreme set of
conditions.

Breaking down the question, “What is your validity
coefficient?” a bit deeper, we find that the terms are in a singular
context. Meaning, the person asking the question is asking for only one
number or one value that represents the entire concept of “Does it
work?” or “How has this made someone else better?” It is important to
realize that a solid, proven assessment technology should be able to
show many studies from different companies, positions, and situations.
Each study, based on the situation, should show a relationship (in one
form or another) between the assessment outcome and the performance
metric. The documented volume of evidence should go way beyond one
“validity coefficient” and provide massive amounts of ongoing research
proving the technology has, and continues, to make other companies
better.

Just as with a hire-termination study, obtaining concrete
performance results for all positions may not be possible. Temper your
expectations for performance studies according to the scope of the
position. Small sample sizes, a lack of objective performance metrics,
or an insufficient amount of time for data collection can affect your
ability to conduct a quality study.

When evaluating an assessment
technology, ask to see multiple client case studies that demonstrate
significant performance improvements based on quality sample sizes.
Reputable assessment technologies should provide access to a technical
manual packed with studies that detail significant improvements in the
areas of turnover and performance.

Summary

There
you have it…the list of five business principles that should guide
your decision on your next purchase, or upgrade, of an assessment
technology. To recap, here are the five principles:

  • Principle #1: An assessment technology should be proven to predict performance.
  • Principle #2: An assessment technology should be the catalyst to continuous workforce improvement.
  • Principle #3: An assessment technology should be focused on fit; more is not always best.
  • Principle #4: An assessment technology should be more than just a score.
  • Principle #5: Assessment technology should be a tool that makes your organization better.

This is by no means an all-inclusive list, but if an assessment
falls short on one or more of these principles, keep shopping. Your
efforts will deliver great dividends for your company when the right
assessment technology is in place.

One tip I recommend to those
evaluating different assessment technology tools is to create a wish
list of features and functionality. Be sure that the needs of all levels
of end-users are included in your wish list. Then categorize the list
into groups consisting of the “must haves” and the “like to haves.” This
little exercise will help you focus your efforts during the evaluation
process to ensure you achieve maximum improvement within the
organization.